Managing a business effectively, efficiently, and innovatively is an art, and we discuss how to make that happen here. In this space, we discuss the methods, tools, techniques, and tips for making your business thrive, from initial planning to redesign and reinvention. The discussion is open, the topics varied, and the opportunities to learn can be endless. Enjoy!

November 2015

11/30/2015

The concept of 'business ethics' is one of those terms which causes quite different reactions in different people--and not always for the same reasons. A recent article in Fast Company, the magazine of business management entrepreneurs, by David Meyer of the Ross School of Business at the University of Michigan seems to think so, and for good reason, as he aptly points out.

"Even before the financial crisis of the past decade, there were the Enron, WorldCom, and Tyco scandals. Before those, there was Gordon Gecko. And while the U.S. economy is finally recovering, the wealth disparity between rich and poor continues to yawn wider. Memories of Wall Street execs cutting themselves big bonuses right after being bailed out are still potent, and so is the popular impression that business and ethics just don't go together," says Meyer, in his introduction.

The sad thing is that he is RIGHT. People simply do not believe that business and ethics can truly go together, but they can, if proper safeguards, including the opportunity to act ethically, is enshrined in an organization. Unfortunately, that is often not the case in this rush to fame and fortune world we live in.

It's a great article, and very timely. If you don't have time to read the whole article, read the story at the start and see if that picture fits you as well.

11/24/2015

This is question that haunts every owner sooner or later., especially when faced with cutting costs in a downturn. Running a business is not easy--it is as simple as that. Making the wrong decision on how to proceed can be a disaster. But, there are things you can do to avoid that disaster--if you take the time to think them out carefully, and not, as the proverbial saying goes: "Put your mouth in motion before you put your mind in gear".

Lets look at both. Profit, the bottom line, is what determines if you will succeed and stay in business or go under. While you can continue to exist for a short time 'in the red', there is a point along your monthly financials that it becomes obvious, if you do not do something different, you will fail. That may mean reducing costs, either through finding cheaper suppliers, reducing employees, reducing benefits, or finding some investor willing to stick with you for a period of time, or even for the long term. All of these can reduce your costs against income.

Reducing costs against income may not achieve what you expect it to achieve--especially where your cost reductions affect the income. Let me give you several examples.

Would you, as an owner or a restaurant or small store, with several employees who are well-liked, competent, and bring in the customer base, reduce their hours, or replace them with less-costly employees?

Would you tell your supplier that you want to replace high-selling stock items with lesser cost items (Which may be already on your shelves but not selling well) and still expect that people will shop in your store?

Would you consider a 'bait-and-switch' situation where you promise something, and then claim the item(s) are not in stock, but you have higher-priced items available?

Would you tell employees to cut the quality level of your products? Take a deli that offers a broad selection of sliced meats. Would you tell your employees to slice thinner, getting more from the bulk item? Would you tell your employees to cut the amount of ingredients, on the hope that your customers simply do not notice?

The answers to the questions above will tell you how important you believe achieving your desired bottom line profit means to your overall outlook.

Then there is your reputation to consider. Look at the questions again, and this time consider if your customers find out that you are doing what is described, and they do not like what they see. if and when they do (And customers ALWAYS eventually find out what you have done), what will the knowledge do to your reputation? What will any damage to your reputation do to your income, and your bottom line?

Warren Buffett has said many times that creating a reputation takes years, but damage to it can ruin your reputation literally in minutes. It will take years to improve it, and former customers will eventually let everyone they know about what they have found. There is often a ripple effect here.

So, we return to the original question--What is more important, Profit or Reputation? I will argue the answer is BOTH. Planning and thought can design solutions that preserve your reputation, while improving your bottom line. i often tell my restaurant clients that reducing menu items, and, concurrently reducing inventory--while retaining the quality of base ingredients--produces results that please customers while reducing the variable costs. Instead of reducing employee hours, give them inducements to bring their customers in more often.

I buy a lot at Staples, as does anyone who needs office supplies. it might not be Staples itself, it might be another firm, but the occasional discount to bring in more business; the specials well down in price on brand name items, and the other little benefits of being a valued customer make it worth coming in a little more often, and thinking about them as soon as you realize you need something. At its heart, simple marketing "The personal touch" may be all it takes to improve income, reduce the costs squeeze, and maintain a good reputation.

Variable costs have variable solutions--it takes a bit of thinking, but it is worth the effort.

11/15/2015

We hear so much about leaders, but what really is a ‘Leader’? What are some of the attributes that set one person apart from others, in a position to exert influence or direction of others? Are there different kinds of leaders? Let’s take a brief look at some of the attributes of leaders, because the answer to one question leads to the answer to the other.

So how do we know a leader? Well, there are some common attributes, I believe at least, that mark a leader. These include:

Character , as Alexandre Havard, in his book Virtuous Leadership (Sceptre, 2007), describes the person with character as one who possesses, magnanimity, humility, prudence, courage, self-control, and justice. These virtues of a leader show a person who strives for great things, has the ability to stay the course in decisions—the right decisions, the ability to give every person their due and respect, and the ability to overcome selfishness and serve others consistently.

A sense of mission in their professional life. They are the trail blazers, the people who not only think ‘outside the box’, but they also work and act outside the box. Oftentimes, they are the creator of ‘the bigger box’, the broader and more challenging environment where success means hard work, but yields great personal and cooperative benefits.

An understanding of the challenges leaders face. Real leaders take the time to think through what they know they must do, how it will affect others, what risk is involved, and what their character tells them they should do, even in the face of potential backlash. In short, they do the RIGHT thing, for the RIGHT reason, at the RIGHT time, and willing accept consequences.

Setting high standards for themselves and others. Leaders work by example. In past centuries on the battlefield, senior leaders stood away from the direct battle, and simply ordered what was to be done. Some leaders—real leaders—such as Bonaparte, Stonewall Jackson, Robert E. Lee, George Armstrong Custer, to name a few. These men were at the lead, not rear, and their men followed them loyally, knowing the leader was just as invested in the outcome as the lowest soldier. They had faith in the leadership, and respect for authority, but most importantly they had a personal belief in their leader.

Leaders assume responsibility for their actions. A leader making decisions is the person responsible for results. When a leader holds back for altruistic reasons, rather than well-thought out decisions which a leader knows must be executed, or when a leader holds back out of fear for the consequences, that person ceases to be a leader. That person becomes a hindrance instead. Leaders who constantly blame others as an excuse for not leading aggressively themselves, are not true leaders.

Leaders take calculated risks. There is a degree of risk in any situation. There are risks simply walking across a public street, or walking down a flight of stairs. A leader does not refuse to take necessary steps because of the risks. Instead, the leader assesses the risk and determines, (1) to avoid the risk by altering the decision to achieve the result in another, less-risky way; (2) Accepting the risk and planning for potential adverse consequences; or, (3) Assessing the risk and determining that the risk is too severe to provide any potential benefit. The critical point is the leader assesses risk and makes decisions based on reality of the situation, and not on other altruistic concerns.

When leaders cannot lead, they need to find others who can do the job. In any organization, there will be others who, in particular circumstances, possess the unique skill set for a task at hand. Good leaders encourage and seek out these people, utilize and foster their skills, and bring them into the decision-making circles. That leads to the final attribute, which is:

Leaders are ready, willing, and able to share leadership with others. Good leaders recognize leadership in others, and make use of that leadership—improving the organization, and making the process of ‘blazing a trail’ to higher, sustained success more plausible and possible.

There are other attributes of leaders, and hopefully, some of you will discuss those in response to this brief piece.

11/09/2015

I recently read a great book by Alexandre Havard, entitled Virtuous Leadership", and it set me thinking on leadership style, and the effect of character on leadership. Havard's premise is a simple one: "Leadership is about character. No, leadership is character." In that simple statement, it easier to understand several of the major commercial debacles over the past few years, such as WorldCom, ENRON, and Madoff. it comes down to very simple premises; a real leader is one with character, ethics, and high standards.

Havard goes on to say, "The perpetrators of corporate wrongdoing invariably know that what they are doing is wrong. And yes, they do it anyway. This is a failure of character." We often wonder why these circumstances occur, and various causes are often attributed to them, ranging from greed, to outright lack of ethics. But is the lack of ethical standards all there is to it? I think not.

People perform because they feel the need to perform. Leaders lead because they feel the urge to provide their expertise to a situation where others have not stepped up to assume that leadership. But what about the person who steps up to lead who is unethical? What about the person who steps up out of a sense that they can make money, fame, or other type of fortune on the misfortunes of others? In my view, that person has a deficient character, as much as a deficiency in ethical standards. They will do things they would not do in personal surroundings, or in activities that affect themselves individually and personally.

It is good to believe that people have a natural tendency to do the right thing. Most people are brought up with a sense of ethical standards--however suspect they may be later. In reading over the years of politicians, mobsters, felons, etc., it seems clear that most started out with parents who wanted their child to succeed, and in a good way. As individuals, many led reasonable lives with their families, separating their 'business' ventures from their personal lives. That seems to be the crux of the issue here; is it possible to apply character and ethical standards differently in one's personal life and in their public life?

The answer to that question should invariably be NO. Again referring to Havard, he says, "Everybody has a mission, ...whether he/she knows it or not. A mission... is not something we invent or imagine. it is a specific calling to do a certain something, and in a specific way....Small minded men pass through life as through a tunnel, and with their 'tunnel vision', they see only themselves."

If we see that a person does things in their personal life at variance from what they do in their professional life, we usually want to now the reason why. here, I will argue that it is a case of deficient character--caused by rationalizing away that they can act differently in the professional world than they might in their personal life. They use rationalization because they do not have the courage of their upbringing and convictions to apply ethical principles consistently in their lives. Additionally, the lure of greed, ambition, and the need for acceptance are more powerful in the sterile surroundings of the boardroom than they might be in the living room of one's home.

Exceptional leaders know what they must do to succeed. In making that effort, they apply ethics, values, standards, and even common sense to devise a course to follow, and then perform in conformance with those principles. Anything short of ethical leadership is really a fraud.